Deal Terms

The economic and control provisions of an investment, including price, instrument, preferences, rights and governance.

Example

A priced round at a set valuation with a 1x non-participating preference and pro-rata rights.

Terms can matter as much as price. A high valuation with bad terms can be a worse deal than a lower one with clean terms.

Investment Memo — A written document setting out the case for and against an investment, the key assumptions, and the reasoning behind the decision, prepared before money moves.
Due diligence — The work of independently verifying the claims made about an investment before committing money to it - the documents, the counterparties, the registrations and the numbers.

Four sections decide the vote; the rest is context — A memo can run to fifteen pages and still be decided on four of them - the thesis, the bear case, the return math and the terms. Everything else is background that makes the reader feel informed without changing the answer. (11 min)
A term sheet sets two things: who gets the money and who gets the say — Every clause in a term sheet affects either the economics - how proceeds are divided - or control - who can make or block decisions. Valuation is only one economic term among several. (10 min)
A higher valuation with harsher terms can leave common holders worse off at every realistic exit — Run the numbers and a lower valuation with clean terms often beats a higher valuation with a large or participating preference, across the range of outcomes that are actually likely. (11 min)
You will not set the price, but you can ask for the three things that matter — Small investors join rounds on terms the lead negotiated. What remains negotiable is usually information rights, pro-rata rights and a most favoured nation clause - and those are worth asking for every time. (10 min)